Paterson says in a statement that the MOU, along with the$83-million Transportation Investment Generating Economic Recoverygrant from the US Department of Transportation, "is what will allowdevelopment of the terminal to move forward. Finally, the Statewill be able to embark upon phase one of this project, which isgood news for our construction workers, good news for the state andgood news for the thousands of passengers that crowd Penn Stationon a daily basis." Details of the MOU were not disclosed.

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The TIGER grant covers slightly less than one-third of thereported $267 million cost of phase 1, which will entailtransportation-related improvements to the below-grade railinfrastructure under the Farley Building and Penn Station. The twoproperties are located across Eighth Avenue from one another. Inthe project's second phase, a new rail facility would beconstructed within the Farley building, only about 20% of which iscurrently used by the US Postal Service as its main facility in NewYork City.

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Also on Wednesday, Paterson gave responsibility for the MoynihanStation project for the first time to both the Empire StateDevelopment Corp. and the Port Authority of New York and NewJersey. The two agencies would be involved, among other things, inhelping to develop a two-phase approach to the project, negotiatingan agreement that ensures Amtrak will use the new intercitypassenger station, assuring that the project gets additionalfunding through the American Recovery and Reinvestment Act andcoordinating federal assistance with the state's Congressionaldelegation and US senators.

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The project has been in various stages of getting off the groundfor nearly two decades, ever since the late Sen. Daniel PatrickMoynihan first proposed turning the Farley building into a railpassenger facility in the early 1990s. In 2007, the ESDC purchasedthe building from the postal service for $230 million, with morethan half that sum coming from the Port Authority. A joint ventureof Vornado Realty Trust and Related Cos., which was selected in2005 to redevelop the Farley building as both a train facility andcommercial space, put up some $55 million of the purchaseprice.

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.